Bill would give seniors, landlords tax relief

ANNAPOLIS -- Senior citizens in Washington County and landlords of all ages could receive some financial relief if state lawmakers approve legislation that would cap and defer property tax increases.

Washington County's delegation to the Maryland General Assembly has sponsored a bill that would freeze property tax increases for those who are 65 years of age and older and defer payment on any such increases until after the homeowner's death.

The amount of the tax increases the homeowner would have paid if not enrolled in the program would be paid back either by that person's heirs or through a tax lien on the property at an interest rate of no more than 3 percent.

The bill allows the Washington County Commissioners to offer the tax deferment to seniors, but does not make it mandatory.

An amendment to the bill would enable landlords of any age to apply for the Homestead Tax Credit, which would cap property tax increases on such properties in Washington County at 5 percent. The Homestead Tax Credit currently does not apply to non-owner occupied homes.

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Maryland officials ordered a 10 percent cap for qualifying homeowners, but individual counties could lower the cap if they chose, as Washington County did by capping taxable assessment increases at 5 percent.

The amendment to include non-owner occupied homes in the Homestead Tax Credit program was suggested by the County Commissioners, who said they support the bill with the amendment, according to written testimony. The amendment would enable landlords, who typically pass on property tax increases to tenants, to avoid dramatic rent increases, said Del. Christopher B. Shank, R-Washington.

Currently, the Homestead Tax Credit is available only on homes that are the principal residences of the owners.

Another bill, which was introduced by Shank, would make a Continuing Care Retirement Community (CCRC) eligible for the property tax cap. Though residents in CCRCs, like Boonsboro's Fahrney-Keedy Home & Village, have all of the same qualities that make homeowners eligible for the property tax increase cap, they do not benefit from the Homestead Tax Credit protection.

For instance, participation requires that the property was not transferred to new ownership, there was no change in the zoning classification, a change did not occur in the use of the property, the previous assessment was not clearly erroneous, the property is the owner's principal residence and the resident has lived in it for at least six months of the year, according to Maryland's Department of Assessments and Taxation.

There are 360 CCRC accounts in Washington County, and capping their property tax increases is expected to cost the county $218,576 in revenue in fiscal year 2011 should Shank's bill be approved.

The cost to the state, which has 11,303 CCRC accounts, would be $813,625, according to bill documents.

Both bills were heard Thursday by the Maryland General Assembly's House Ways and Means Committee, but no action was taken.

Ed Wurmb, founder of the Washington County Senior Coalition, testified in favor of both bills, saying they would provide some needed relief for senior citizens in Washington County.

"The entire concept is good for seniors," he said of the bill that would freeze property taxes for seniors.

Several residents of Fahrney-Keedy Home & Village were in Annapolis Thursday to support their inclusion in property tax increase caps.

Elisabeth Creech, 69, and her husband, Vance Creech, 73, are residents at the Boonsboro CCRC who said their property taxes have increased by about 95 percent in just three years because of the increase in the assessed property value of the Fahrney-Keedy Home & Village.

The 34 single women, six single men and 11 couples living there purchased the cottages with an upfront cost, and are responsible for paying property taxes, utilities and a minimal maintenance fee.

By paying the upfront cost, residents reserve the right to live in the property for life.

The Creeches, who moved to Fahrney-Keedy from North Carolina in 2005, paid $1,103.76 in property taxes in 2006. That amount is expected to be $2,115 this year.

Thomas Gast, 75, moved to Fahrney-Keedy in 2005, and said property tax increases causes a lot of worry and strain for the senior community, who mostly live on a fixed income. At least one Fahrney-Keedy resident has gone back to work part-time because of the rising cost of property taxes.

The Washington County Commissioners have not raised the property tax rate, which is 94.8 cents per every $100 of assessed property value, in 10 years. But as property values, and therefore property assessments, increase, the amount homeowners pay in property taxes also rises. Washington County properties are assessed for value every three years.

While CCRC residents are not included in that property tax increase cap, the Creeches and Gast say they should be because they meet every requirement that homeowners must meet in order to take advantage of the Homestead Tax Credit.

The Homestead Tax Credit explained

Assume the previous assessment was $100,000 and the new assessment is $120,000. An increase of 10 percent in the original assessment would result in an assessment of $110,000. The difference between $120,000 and $110,000 is $10,000. The tax credit would apply to the taxes due on that $10,000. Using Washington County's tax rate of 94.8 cents per every $100 of assessed property value, the additional tax owed would be $47.40.